Undercooked Sales at Cracker Barrel and P.F. Chang's

Competition, weather, and consumer spending are on the menu.

Whether you like your chicken fried or stir-fried, your favorite eatery may be stumbling out of the gate in 2008. Before the opening bell Thursday, reports from CBRL Group (Nasdaq: CBRL) and P.F. Chang's China Bistro (Nasdaq: PFCB) revealed declines of 1.1% and 1% in same-store sales, respectively. What's to blame for the cold meal?

In CBRL Group's case, it's that ol' blustery winter weather, and weaker-than-expected consumer spending. The weather and economy are common culprits, since we can't blame managers for things outside of their control. While I don't deny the reality of the situation, those excuses can sound like blaming the rain for getting you wet, when you could simply have grabbed an umbrella.

To its credit, CBRL isn't alone. Panera Bread (Nasdaq: PNRA) is tripping up lately for similar reasons. In addition, CBRL's Old Country Store reported 1% growth in comparable retail sales. As a fairly regular diner at Cracker Barrel, I've noticed some new merchandise, which may explain the stemming tide of falling sales in the retail side.

On the other hand, P.F. Chang's cited rising operating costs and minimum-wage hikes. Even after raising menu prices, which increased the average check by 5%, and rolling out a broader grill menu, the company still couldn't muster up a positive increase in comps. P.F. Chang's fortune cookie doesn't seem to bode well; management said it expects costs to continue rising, and it believes that those expenses will affect fourth-quarter results more than previously anticipated.

These two restaurants' valuations reflect their recent negative sentiment and differing phases of growth. P.F. Chang's is a newer concept, growing 15%-20% per year, but its shares are valued at 16 times forward earnings per share. Compare that to the 8.4 times forward earnings for CBRL Group, a mature concept that has grown only in the single digits the past five years.

As a value investor, I'm drawn to cheap stocks like these. My personal familiarity with CBRL Group and its decades-old proven concept earn it my favor, but both companies are holding up relatively well, given the challenges they face. Still, even if you love the food, know that the business side is intensely competitive for restaurants. Expecting a quick turnaround is usually unrealistic.